While innovations such as artificial intelligence have become all the rage, there’s another type of technology – biotechnology – that deserves careful consideration for your portfolio. Indeed, if you haven’t considered the sector, it’s really time to focus on biotech stocks.
First, let’s get the obvious matter out of the way: biotech stocks benefit broadly from a permanently relevant narrative. That doesn’t mean individual companies are guaranteed to rise. It’s just that the concept of addressing diseases and chronic conditions is effectively eternal. A thousand years from now, you can probably bet that people are investing in healthcare enterprises.
Second, biotech stocks enjoy a massive total addressable market. According to Grand View Research, the global sector reached a valuation of $1.55 trillion last year. By 2030, the ecosystem could be worth $3.88 trillion. If so, that would imply a compound annual growth rate (CAGR) of 13.96%.
Finally, we may see a sector rotation away from tech and toward the healthcare arena. If so, that would likely benefit the below biotech stocks to buy.
Boston Scientific (BSX)
One of the top medical device companies in the world, Boston Scientific (NYSE:BSX) also ranks among the best biotech stocks thanks to its business unit covering cardiovascular conditions. Analysts rate BSX a consensus strong buy with an $82.95 average price target, implying 7% upside potential. Further, the most optimistic target calls for a price per share of $95.
Financially, Boston Scientific brings much consistency to the table. Between the second quarter of last year to Q1 2024, the company’s average earnings per share reached 53.5 cents. This performance translated to an average earnings beat — that is, how much the actual EPS exceeded analysts’ consensus view – of 7.5%.
During the trailing 12 months (TTM), Boston posted net income of $117.2 million or earnings of $1.05 per share. Revenue during the period hit $523.53 million. For fiscal 2024, covering experts believe that EPS may rise 13.7% to hit $2.33. On the top line, sales could land at $16 billion, up 12.3% from the prior year.
Zoetis (ZTS)
Zoetis (NYSE:ZTS) falls under the drug manufacturing industry, focusing on the discovery, development, manufacture and commercialization of animal health medicines, vaccines and diagnostic products and services. While not the most traditional candidate for biotech stocks, ZTS is compelling for focusing on four-legged creatures. After all, Americans love their animals and that goes for citizens of other nations.
It’s not just about fluffy fundamental assumptions: Zoetis brings performance to the table. Admittedly, the company did suffer an earnings disappointment in Q4. However, during the past four quarters, Zoetis posted an average EPS of nearly $1.35. This print translated to an average earnings surprise of 1.13%. That’s very good because it includes the Q4 miss.
In the TTM period, the drug manufacturer posted net income of $2.39 billion or $5.19 per share. Revenue in the cycle reached $8.73 billion. For fiscal 2024, analysts anticipate expansion of 8.3% in EPS to land at $5.76. On the top line, sales may rise 7.1% to reach $9.15 billion.
It’s not particularly generous but the company also offers a forward yield of 1.03%.
Jazz Pharmaceuticals (JAZZ)
Based in Ireland, Jazz Pharmaceuticals (NASDAQ:JAZZ) identifies, develops and commercializes pharmaceutical products for unmet medical needs. Per its public profile, the company offers various therapeutics for sleep disorders, epilepsy and hematologic cancers. Analysts rate shares a consensus strong buy with a $179 average price target. That implies an upside potential of nearly 66%.
Financially, the company could use some work. During the past four quarters, it averaged an EPS of around $4.26. However, analysts were looking for more. Thus, Jazz is currently running a negative earnings surprise of almost 10%. At the same time, it’s not impossible for the enterprise to make a comeback given its broad relevancies.
To note, JAZZ stock presently trades at a trailing-year sales multiple of 1.95X. Over the past one-year period, the market supported an average sales multiple of 2.3X. Again, it’s possible that JAZZ could rise back up.
For fiscal 2024, experts believe EPS may rise 1.4% to $18.55. Further, sales may see a 5.6% lift to $4.05 billion. If you’re looking for a potential discount in biotech stocks, JAZZ could be a solid idea.
AstraZeneca (AZN)
Based in the U.K., AstraZeneca (NASDAQ:AZN) also falls under the drug manufacturing ecosystem. It focuses on the discovery, development, manufacture and commercialization of prescription medicines. Specifically, AstraZeneca offers relevancies across a wide range of treatment areas, including oncology, cardiovascular, renal and respiratory. AZN stock enjoys a unanimous strong buy view among analysts with an $85.80 average price target.
To be fair, AstraZeneca is also one of the biotech stocks that could use a ramp up in the financial department. Between Q2 2023 and Q1 2024, the company posted an average EPS of 92.5 cents. However, analysts were looking for more. While AstraZeneca did beat in Q2 and Q3, disappointments in Q4 and Q1 led to a negative earnings surprise of 1.8%.
Now, during the TTM period, the drug manufacturer posted net income of $6.33 billion or $2.03 per share. Revenue in the cycle hit $47.61 billion. The most recent quarterly sales growth rate (year-over-year) landed at 16.5%.
Looking to year’s end, experts anticipate 11% growth in EPS to $4.03. On the top line, revenue may expand by 13.4% to reach just under $52 billion.
Corcept Therapeutics (CORT)
A biopharmaceutical firm, Corcept Therapeutics (NASDAQ:CORT) focuses on the discovery and development of drugs for the treatment of severe endocrinologic, oncologic, metabolic and neurologic disorders. It’s one of the most important biotech stocks and as a result, analysts rate CORT a unanimous strong buy. Just as well, the experts see shares reaching $45.88, implying an upside potential of 51%.
Financially, Corcept has been on a roll. Over the last four quarters, the company posted an average EPS of 26.5 cents. This performance translated to an average earnings surprise of 28.83%. Of course, with that hot performance comes a hot premium. Shares trade for 6.41X trailing-year sales. However, it must be noted that during the past year, the market accepted a multiple of 6.76X.
During the TTM period, Corcept posted net income of $117.2 million or $1.05 per share. Revenue in the cycle reached $523.53 million. For fiscal 2024, experts see a 2.13% rise in EPS to 96 cents. However, all eyes will be on the top line, with revenue expected to rise 31%. If so, we’re talking about $632.15 million, with a high-side target of $640.83 million.
Crinetics Pharmaceuticals (CRNX)
Headquartered in San Diego, California, Crinetics Pharmaceuticals (NASDAQ:CRNX) is a clinical-stage pharmaceutical firm. It focuses on the discovery, development and commercialization of novel therapeutics for rare endocrine diseases and endocrine-related tumors. Analysts rate shares a unanimous strong buy with a $72.20 average price target, implying 61% upside potential. The high-side estimate calls for $97 per share.
At first glance, Crinetics seems awfully risky for one of the heavily endorsed biotech stocks. In the past four quarters, the company posted a loss per share of 94.5 cents. Many biotechs lose money, that’s no surprise. However, the red ink missed analysts expectations by an average of 11.55%. That’s not the greatest look.
In the TTM period, Crinetics incurred a net loss of $235.46 million or $3.77 per share. Revenue however hit $1.97 million. For fiscal 2024, experts project a big loss of 47.9% to $2.09 million in sales. So, why the fuss?
For fiscal 2025, analysts are expecting sales of $14.13 million. That’s a massive cry from 2023’s tally of $4.01 million.
Cytokinetics (CYTK)
Based in South San Franciso, California, Cytokinetics (NASDAQ:CYTK) is a late-stage biopharmaceutical firm. It focuses on the discovery, development and commercialization of musical activators and inhibitors as potential treatments for debilitating diseases. Overall, experts rate CYTK a consensus strong buy with an $85.14 price target, implying 61% upside potential. The high-side estimate calls for $107.
At the moment, Cytokinetics admittedly looks risky compared to other endorsed biotech stocks. In the past four quarters, the company incurred a loss per share of $1.35. Again, biotechs lose money all the time. However, the misses in this case are bad. We’re talking about an average negative surprise of 39.48%. That’s not a good look at all.
During the TTM period, Cytokinetics lost $530.6 million or $5.40 per share. Revenue during the period reached $3.75 million. For fiscal 2024, analysts see a favorable mitigation of red ink to $4.54 per share. ON the top line, they’re targeting sales of $16.86 million. If so, that would imply a gargantuan growth rate of 123.9%.
In other words, it’s one of the biotech stocks to buy if you’re a speculator.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.